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European Commission wants global methane emissions index for EU gas imports

The European Commission wants to see a global index for tracking the methane emissions of different gas supply sources at the EU and international levels, as part of efforts to reduce such emissions, it said in an unofficial draft of its EU methane emissions strategy expected on Oct. 14.

Methane is a potent global warming greenhouse gas, and most leaks happen before the natural gas or LNG reaches the EU, so a new EU policy on methane emissions could have far-reaching impacts on the global gas market.

"Russia, one of the world's largest gas producers and the biggest gas supplier to the EU, has an important role to play in reducing methane emissions," said the draft published by EU media network Euractiv on Oct. 12.

The EC also wants closer cooperation on methane regulation with the U.S., which supplies LNG to the EU, as well as Canada and Mexico.

It wants to encourage more producer countries and companies to join the United Nations Environment Program's Oil and Gas Methane Partnership, or OGMP.

This OGMP is a voluntary initiative to reduce methane emissions and improve measuring and reporting them.

It covers upstream oil and gas companies, and members include BP PLC, Ecopetrol SA, Eni SpA, Equinor ASA, Neptune Energy International SA, Petróleos Mexicanos SA de CV, PTT PCL, Repsol SA, Royal Dutch Shell PLC and Total SE.

The EC wants to see OGMP expanded to include the midstream and downstream gas sectors, as well as the coal sector and abandoned sites.

Call for consumer pressure

The EU is the biggest gas importing region in the world, and the EC wants to encourage the world's other big gas importing countries — China, South Korea and Japan — to work with the EU to support a global monitoring, reporting and verification standard for methane emissions.

The EC wants to see an independent global mechanism for tracking and reporting man-made methane emissions set up and linked to the United Nations Environmental Program.

It would be this mechanism that the EC would want to see compile and publish the Methane Supply Index enabling gas buyers to compare different sources.

The aim is to empower "buyers to make informed choices" when buying fuels, the draft said.

The EC would propose to use a default value within the EU for gas volumes not covered by an "adequate" monitoring, reporting and verification system.

But Poppy Kalesi, director of global energy at U.S.-based NGO Environmental Defense Fund, was skeptical that buyers would be influenced by the carbon footprint of their gas.

"If you leave it to the market, buyers will choose the cheapest gas," Kalesi told S&P Global Platts on Oct. 12.

Mandatory reporting, new norms

The EC plans to propose mandatory EU measurement, reporting and verification rules for all energy-related emissions, building on the OGMP methodology, in 2021, according to the draft strategy.

It also plans to propose an obligation to improve leak detection and repairs on all EU natural gas infrastructure.

The EC is more tentative, however, about a measure that would have a direct international impact, saying only that it will "explore feasibility and added value of possible performance targets or standards for natural gas" as a way to encourage reducing EU-related methane emissions.

Setting an emissions standard for all gas sold into the EU market would capture the international supply chain, Kalesi said.

"It would be important to link a performance standard to the EU gas market reforms [which the EC plans to propose in 2021] and apply it to all gases: natural gas, renewable gases, hydrogen," the director said.

Buyers of noncompliant gas should pay penalties, thus creating an incentive to be sustainable, she said.

The EC's push to reduce methane emissions is part of its European Green Deal strategy to make the EU climate-neutral by 2050.

"If this problem is not solved, natural gas will have a very, very difficult future, and in the short term, not the long term," the EC's then deputy director-general for energy, Klaus-Dieter Borchardt, said in July.

Siobhan Hall is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.